Mapping out a true picture of a “hidden” real estate market is bothcompelling and confounding for real estate pros. By Paula Hess

In the aftermath of the recession and its relatedhousing crisis, speculation swirled that a massivebacklog of REO, severely delinquent, and foreclosedhomes could hit the market and submerge homeprices and any trace of a housing recovery. While thethreatened tsunami of shadow inventory has largelybeen downgraded—mitigated by rising home pricesand investors’ bulk purchases of foreclosed homes—some real estate professionals believe a shadowinventory still looms with a riptide-like potential todrag the housing recovery off course.

But pinning down the scope of the shadow
inventory has always been challenging. Generally, it
amounts to the total number of delinquent mortgages plus bank-owned and foreclosed properties
not included on the MLS. It is difficult for real estate
professionals to assess any market where tight
inventory must be reconciled with a “hidden” supply
of vacant homes. “I think the average agent doesn’t
know if there is shadow inventory out there,” says